EU business leaders would prefer a free trade agreement (FTA) with the UK after Brexit than a customs union, according to a survey to be published today.
More than two-thirds of the 800 bosses polled by law firm Baker McKenzie across major EU markets including Germany and France said that an FTA would be “important” for their firm, compared to only 45 per cent for a customs union deal.
FTAs generally cover a broader range of goods as well as some services within their scope. However, some trade experts are sceptical that an agreement can be reached quickly. Customs unions only cover goods.
Nearly half of the respondents say they have reduced investment in the UK since the Brexit vote, with uncertainty still looming over the shape of trade arrangements following March 2019, when the UK leaves the EU.
Yet firms in the EU are keen to retain connections with Britain. Irish firms in particular are keen to preserve trade links with the UK, with 97 per cent of leaders saying their business would be better off without Brexit.
Across the six economies surveyed 96 per cent of firms said that keeping close trade ties was more important than “punishing” the UK for Brexit – although as many as 45 per cent of German bosses supported punitive action.
Baker McKenzie Trade partner Ross Denton said: "The clock continues ticking on a Brexit deal and, without any clarity as to its final shape, businesses in both the EU and UK are inevitably having to take matters into their own hands and make difficult strategic decisions.
"These decisions could end up hurting the UK economy in the long run if, as our survey suggests, EU27 businesses continue to re-think or pull the plug on their UK investments. It's crucial now, more than ever before, that these businesses are given a voice on Brexit and are heard in Brussels and by their local governments."